Russia's dispute with Belarus over gas supplies seems to be turning from a problem of politics into a collision of economic worlds. The rift between Moscow and Minsk has widened since Oct. 25, when Gazprom announced that the Russian monopoly would cut its deliveries because Belarus had used up its allotment of heavily subsidized gas for the year.
On Nov. 6, Belarusian President Alexander Lukashenko accused Kremlin officials of trying to take control of the country's pipeline company by slashing gas deliveries in half. Speaking on Belarusian radio, Lukashenko said, "They demanded immediate privatization of Beltransgaz. Pressure on Belarus and attempts to shake us down, as people say, are unacceptable."
Russia's Foreign Ministry and Gazprom called the move "purely economic." In a statement, Gazprom said it is trying to recover a balance of $251 million in debts, fines, and penalties for gas supplied since 1999. Belarus has paid $31 million, or only 12 percent of the 2002 contract, Gazprom said.
The dispute marks another setback with Russia since Lukashenko's outburst over Russian President Vladimir Putin's proposal in September for a monetary merger by 2004. Lukashenko accused Russia of planning to strip Belarus of its sovereignty and of "trying to overthrow me for seven years."
The future of the proposed union between the two countries now looks bleak. Unless Belarus speeds up payments and agrees to a 50 percent price hike, all supplies could be halted by Nov. 15, as the winter heating season starts. Gazprom has been charging Belarus at a domestic rate of $24 per thousand cubic meters, less than a fourth of Russia's charge for EU customers.
In his radio address Lukashenko responded with fury and occasional contradictions, saying at one point: "But I want both Russians and Belarussians to know and understand that this is not about economics, this is unprecedented pressure on our country. This is not the first case, either."
Lukashenko said Belarus should pay current bills now and all arrears within a year. But at the same time, he said Russia should pay Belarus $500 million for what he called "unregulated relations on the collection of indirect taxes," as well as items that include "privileges" during construction of the Yamal Peninsula pipeline and the cost of customs and defense for the Russian border.
Lukashenko suggested that Belarus could also raise transit tariffs for Russian gas to Europe, which are far cheaper than those through Ukraine.
Gazprom seems to be trying to settle accounts with several countries at once. On Monday, the company may have tried to dispel the notion that it was singling out Belarus by notifying both Latvia and Lithuania that it had suspended deliveries over unpaid bills.
The problem involving reimbursements by the Russian gas trader Itera disrupted the opening of a new Intergas pipeline from Belarus to Lithuania. In the past, such cutoffs have raised the specter of political pressure in the Baltics, which have recently seen a series of Russian moves aimed at controlling their oil ports. But in the case of Belarus, Gazprom may have more economic motives.
The issue is about more than Lukashenko's anger and the union. Belarus and its unreformed economy based on energy subsidies now seems to stand between Russia and the EU as it seeks to join the WTO.
The EU has demanded that Russia raise domestic gas tariffs to European levels as a condition of joining the WTO. And, although officials have reported recent progress, they have also made clear that tariffs remain a major obstacle to membership in the WTO.
On Nov. 6, Fritz Harald-Wenig, the trade defense director of the European Commission, said that the huge gap between domestic and export gas prices amounts to a subsidy for Russian industry, giving its products an unfair edge abroad. In Moscow, Yelena Danilova, a Russian trade official, called the EU demand for equal tariffs "interference" in Russia's internal affairs.
Despite the harsh words, the EU offered Moscow a strong incentive by formally recognizing Russia as a "market economy," a prize Putin has long sought.
But the gas problem may still bar the way to the WTO. Last week in Geneva, Russia's WTO negotiator, Maksim Medvedkov, cited the rift over gas prices, saying, "We are not at all close to an agreement with the European Union."
Lukashenko's demands now seem to represent an old way of doing business for Moscow, which is more intent on seeking a new way with the EU.
Michael Lelyveld wrote this article for Radio Free Europe/Radio Liberty